Floating interest rates

Part 1 of ebook "Real estate finance and investments (14th edition)" provides readers with contents including: overview of real estate finance and investments; mortgage loans; residential housing; fixed interest rate mortgage loans; adjustable and floating rate mortgage loans; underwriting and financing residential properties;...

272p tuongnhuoclan 27-11-2023 9 5   Download

Part 1 of ebook "Accounting for investments - Volume 2: Fixed income securities and interest rate derivatives - A practitioner’s guide" provides readers with contents including: fixed income securities - theory; fixed income securities - fair value through profit or loss; fixed income securities - available-for-sale; fixed income securities - held-to-maturity; presentation, disclosures & reclassification; interest rate derivatives - theory; interest rate swaps - receive fixed pay floating;...

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Continued part 1, part 2 of ebook "Accounting for investments - Volume 2: Fixed income securities and interest rate derivatives - A practitioner’s guide" provides readers with contents including: interest rate swaps - pay fixed receive floating; interest rate caps; interest rate floors; interest rate collar; cross-currency swaps (XCCY swaps);...

375p tuongnhuoclan 27-11-2023 6 5   Download

Chapter 12 The open economy revisited: the Mundell-Fleming model and the exchange-rate regime. After studying this chapter you will be able to understand: The Mundell-Fleming model (IS-LM for the small open economy), causes and effects of interest rate differentials, arguments for fixed vs. floating exchange rates, how to derive the aggregate demand curve for a small open economy.

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After completing this chapter, students will be able to: To explain why MNCs consider long-term financing in foreign currencies; to explain how the feasibility of long-term financing in foreign currencies can be assessed; and to explain how the assessment of long-term financing in foreign currencies can be adjusted for bonds with floating interest rates.

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In this chapter, students will be able to understand: Evaluate the advantages and disadvantages of alternative systems (free floating, fixed, managed float) for the determination of exchange rates; understand the determinants of exchange rates (qualitative); how to forecast (quantitative) exchange rates using models: purchasing power parity, relative purchasing power parity, interest rate parity, an unbiased forward rate.

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In this paper, we attempt to estimate reaction functions of the Central Bank of the Republic of Turkey (CBRT) based on Taylor rule and Hybrid McCallum-Taylor rule. We apply Generalized Methods of Moments (GMM) and Limited Information Maximum Likelihood (LIML) methods for estimating monetary policy reaction functions, over the period when the CBRT has conducted inflation targeting by using nominal interest rate as a monetary policy tool in free floating exchange rate regime.

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A large firm pays a fixed interest rate to its bondholders, while a smaller firm pays a floating interest rate to its bondholders. The two firms could engage in a swap transaction which results in the larger firm paying floating interest rates to the smaller firm, and the smaller firm paying fixed interest rates to the larger firm.

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Chapter 11: Financial instruments as liabilities. After reading this chapter, you should be able to answer the following questions: How liabilities are shown on the balance sheet? Why and how bond interest and net carrying value change over time? How and when floating-rate debt protects lenders? How debt extinguishment gains and losses arise, and what they mean?

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Banking sector reforms have been sequenced to correspond with changing regulations of the foreign exchange market. The government has allowed the exchange rate to gradually float (as opposed to a “crawling” peg), and full current account convertibility has been introduced, with de facto capital account convertibility for nonresidents, and calibrated liberalization for residents.

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When a corporation refunds a bond issue, choices have to be made between fixed-rate and floating-rate bonds based on expectations of future interest rates. Whether it is financially viable to refund a bond issue depends on many factors, including the magnitude of the decline in interest rates, the call premium, flotation costs, overlapping interest and the corporate tax rate, and all of these factors should be considered in the decision making process.

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Conventional wisdom is that an increase in the target Fed funds rate leads to an imme- diate increase in market interest rates, and a fall in bond prices; yet evidence for this view is elusive. Cook and Hahn (1989) documented a strong response in the 1970s, but regressions using data from the 1980s and 1990s show little, if any, impact of Fed policy on interest rates. Roley and Sellon (1995), for example, conclude that “although casual observation suggests a close connection:::, the relationship between Fed actions and long-term interest rates appears much looser and more variable.

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Index2 a spread over U.S. Treasury bonds of a similar maturity. Typically, payments made by one counterparty are based on a floating rate of interest, such as the London Inter Bank Offered Rate (LIBOR) or the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap , while payments made by the other counterparty are based on a fixed rate of interest, normally expressed as The maturity, or “tenor,” of a fixed-to-floating interest rate swap is usually between one and fifteen years.

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Interest rate swap terms typically are set so that the pres ent value of the counterparty payments is at least equal to the present value of the payments to be received. Present value is a way of comparing the value of cash flows now with the value of cash flows in the future. A dollar today is worth more than a dollar in the future because cash flows available today can be invested and grown. The basic premise to an interest rate swap is that the coun terparty choosing to pay the fixed rate and the counterpar ty choosing to pay the floating...

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Consider a security that has a coupon rate that floats off of the London Interbank Offered Rate (LIBOR). Such a security might pay a coupon rate of Libor plus 50 basis points. However, if there is a cap that limits the coupon to 7 percent, then when LIBOR reaches 6.50 percent, any further increases in LIBOR will not result in any increases in the coupon rate on the security. Floating-rate investments with interest rate caps include CMO floaters and adjustable-rate mortgage (ARM) securities. The longer cash flows remain outstanding on such securities, the greater...

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Inverse floating-rate securities are a special kind of floater. Their coupon rates increase when general market rates decrease. For example, the coupon may be 8 percent minus the three-month LIBOR. These securities often appeal to investors when the yield curve is very steep, as the coupon formula will give a coupon rate often well above short term financing costs. However, an increase in LIBOR can cause the interest rate on this type of security to drop very low and possibly to zero. If the security has a long maturity, it can lose significant...

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The World Bank (IBRD) has issued over USD 2.3 billion equivalent of green bonds through 39 transactions in 15 currencies. 50 These are mostly 3-7 year, fixed and floating rate notes (i.e. which pay a variable rate of interest), issued via the AAA rated IBRD, designed to raise capital for projects that aim to combat climate change in developing countries. Projects funded include alternative energy installations, funding for new technologies that reduce greenhouse gas emissions, reforestation, watershed management and flood protection.

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